FAS 157 Private Equity

For some hedge funds, FAS 157 Private Equity valuations pose new compliance challenges, some merely need to tweak their practices, and some hedge funds have been FAS 157 compliant since 2006.  A clear trend since the FAS 157 release is significantly longer footnote disclosures, and as more disclosure is provided, even more technical disclosure is demanded.  Auditors seek corroborating data points from co-investors for the same transaction, yet it is possible that sophisticated investors have entirely different views of fair value after the initial purchase.  Likewise, auditors seek corroborating data points amongst third-party valuation agents for FAS 157 Private Equity fair value, which can often have significant differences.  Even so, debates between auditors and clients don’t always have to be about write downs.  In periods of high volatility, liquid investments swing wildly and so do illiquid FAS 157 Private Equity fair values, although not as transparently.  At DerivActiv, we think the key to having a defensible FAS 157 Private Equity Valuation is to have robust and consistent period-to-period methods and procedures.

DerivActiv is not a black box; call to find out how we perform valuations for FAS 157 at: 1-866-200-9012

Although you can accept a hedge fund’s FAS 157 Fair Value disclosure for your financial statements, unaudited quarterly reported earnings may have perceived potential for conflicts of interest.  Audited quarterly valuations from the hedge fund are acceptable, though not ideal.  These data points, however, are very valuable to track from period to period.  It would be very convenient simply to pass along these values, but there are no shortcuts; best practices suggest each reporting entity should produce their own fair value valuations.  A good motto to remember is, “If it has not been documented, it has not been done.”

DerivActiv’s valuation experts perform FAS 157 services for investors and hedge funds across a spectrum of asset classes.  We know to drill down and wade through irrelevant information to see clearly the underlying asset and its value.  Fiduciary responsibility includes obtaining competent technical advice.

FAS 157 Private Equity Funds

Instead of a black box, FAS 157 Private Equity Fund valuations can be a white box.  Let good, consistent methods and procedures be your floodlight to discovering fair value.  Below are some of the resources DerivActiv reviews for FAS 157 Private Equity to ensure that our procedures are best practices.

  • Global Investment Performance Standards (GIPS)

  • Private Equity Industry Guidelines Group (PEIGG)

  • Best Practices for Hedge Fund Managers and Investors from the President’s Working Group on Financial Markets

  • Alternative Investment Management Association Guide to Sound Practices for Hedge Fund Valuation

  • SEC Sample Letter Sent to Public Companies on MD&A Disclosure Regarding the Application of SFAS 157

  • Leading-Practice Disclosures for Selected Exposures Issued by the Senior Supervisors Group

FAS 157 Accounting
FAS 157 Application
FAS 157 Definition of Fair Value
FAS 157 Derivatives
FAS 157 Disclosure
FAS 157 Disclosure Examples
FAS 157 Effective Date
FAS 157 Guidance
FAS 157 Implementation
FAS 157 Level 1
FAS 157 Mark to Market Accounting
FAS 157 Private Equity
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